Asserting that the economic situation is likely to improve during the year, Chief Economic Adviser V Anantha Nageswaran on Tuesday expressed hope that the private sector is expected to accelerate capital expenditure from the second half of the current fiscal.
The investment from private sector has been muted for past many years despite several measures, including corporate tax cut, taken by the government to reinvigorate it.
"Bank credit is beginning to pick up especially in MSME sector. Therefore, I think probably by the end of the second quarter or in the second half of the year, private sector picking up the baton of capital expenditure... Sooner rather than later Indian private sector will pick up the capital expenditure baton and run with it," he said at an event organised by AIMA.
Finance minister Nirmala Sitharaman in the Budget raised capex (capital expenditure) by 35.4 per cent for the financial year 2022-23 to Rs 7.5 lakh crore to continue the public investment-led recovery of the pandemic-battered economy. The capex for the year gone by was pegged at Rs 5.5 lakh crore. An RBI survey has shown a jump in capacity utilisation by the industry from 68 per cent to 74 per cent, Nageswaran said, adding, the top four firms in several sectors are already operating over 80 per cent capacity.
He said, the government continues to balance short-term compulsion without losing sight of longer term aspiration, macroeconomic stability, prudent budgeting, transparency and emphasis on capital expenditure. To provide relief to poor, the government has extended free food programme by another six months, which would cost the exchequer about Rs 80,000 crore, 0.65 per cent of GDP.